Chief Executive Officer’s review continued
Creating value through the execution of our strategy Over the past three years – and even through the disruption caused by Covid-19 – our confidence in the direction of our Company has grown. Our mission, vision and values have remained the same and we have created value through the relentless execution of our transformation programme, “Securing Growth Together”. Our mission is to make the world safer and more secure. Our vision is to be the leading cyber resilience provider globally, trusted to protect and secure our customers’ critical assets and sought after for our complete people-led, technology-enabled cyber resilience solutions that enable our customers to thrive. Our values are work together, be brilliantly creative and embrace difference. Our medium-term objectives are: • For our shareholders: • Medium-term target of double-digit revenue growth and margin improvement for Assurance • Return Software Resilience to sustainable growth • Disciplined cash generation • For our customers: • Use our unique data, capability and insight to help customers to meet their cyber resilience needs • For our people: • A global hub for cyber talent • An inclusive environment where everyone feels safe to be authentic and which is representative of the diversity of the world in which we live As noted at our interim results, we are now building on the strong initial foundations of our Securing Growth Together programme and have moved to the next phase of becoming the complete provider of global cyber resilience solutions, particularly by: • Broadening our portfolio (adding services and solutions across the cyber lifecycle) • Improving how we go to market globally (becoming easier to engage with and buy from) At our interim results, we announced the investment of £3m into propositions that we consider critical for the future and for realising our ambition to become a complete provider of cyber resilience services, acting as a one-stop shop to meet our customers’ demand for evidence-based solutions that offer them peace of mind.
The table below describes these propositions and highlights our progress in FY21: Proposition Progress Escrow-as-a-Service (EaaS), our cloud escrow proposition
• 83% increase in EaaS orders to £2.2m • Weighted year end EaaS pipeline at £1.1m • Notable FY21 wins include Sky, Carrefour, Christie’s, Deutsche Bank, Standard Chartered and Barclays • MDR revenue growth of 14.3% • Sales orders growth of 15.8% to £71.8m • Launched at the end of the financial year
Global Managed Services (GMS)
New MDR service based on Microsoft’s Azure Sentinel platform New Remediation service to develop clients’ resilience
• Global rollout after successful UK launch (revenues of £2.1m with current pipeline of c.£3m)
We will invest further in FY22 and beyond to build on these successes.
Acquisition of IPM business
The most significant investment of the year was our recent acquisition of the IPM business, which marked an exciting culmination of our financial year. We obtained shareholder approval on 1 June and completed the transaction on 7 June for $220m, subject to a normalised working capital adjustment during FY22. On this basis, the results of the IPM business will be consolidated from 1 June 2021. The acquisition was funded through an equity placing (£70.2m) in May combined with a new three year $70m term loan, existing cash balances and our revolving credit facility. The acquisition aligns with the Group’s existing strategy and will: • Scale up the Group’s core business to create a global business and platform for further growth • Generate revenue synergies through allowing the enlarged division to offer NCC Group’s broader suite of established verification services as well as the newer Escrow-as-a- Service (EaaS) cloud offering to the IPM business’ existing customer base • Present an exciting new opportunity to sell NCC Group’s cyber security services from its Assurance division into the IPM business’ broad and blue-chip customer base in the medium term • Be accretive to earnings per share from completion, even without factoring in revenue synergies • Result in greater strategic strength for the future Financially and, prior to our ownership, the business generated revenues of c.£23m and operating profit of c.£15m for the 12 months ended 31 December 2020, with cash conversion of c.90%. It is expected that for NCC Group’s FY22 financial year, the business will incur c.£2.5m of one-off integration costs. From an integration perspective, integration is on plan with all workstreams (People, Customers, Operations, Finance and IT) making good progress against objectives. The business is also supported by TSA and MSA arrangements. From a personal perspective, it has been a pleasure to welcome our new colleagues from the IPM business. I look forward with confidence to the future as we transform our Software Resilience business into a growing, high margin global leader.
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NCC Group plc — Annual report and accounts for the year ended 31 May 2021
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